Nvidia to License Graphics Technology to Other Chipmakers

By Ian King -
Jun 19, 2013

Nvidia Corp. (NVDA), the largest maker of
chips used in computer graphics cards, rose the most in more
than five weeks after saying it plans to license technology to
other chipmakers, seeking to broaden sources of revenue.

Nvidia’s shares advanced 3.1 percent to $14.84 at the close
in New York, for the biggest gain since May 10. They have
climbed 21 percent this year, compared with a 24 percent rise in
the Philadelphia Semiconductor Index.

Both current and future graphics technology will be
available for customers seeking to build their own products, the
Santa Clara, California-based company said in a statement
yesterday. The company didn’t exclude competitors as potential
licensees.

Chief Executive Officer Jen-Hsun Huang is leading an effort
to reduce Nvidia’s reliance on personal-computer graphics cards
amid the worst slump in PC sales on record. By selling licenses
for the know-how behind its products, Nvidia will be able to get
its technology into a broader array of devices, according to the
statement. A shift to licensing may also indicate that Nvidia
isn’t getting enough demand for its Tegra applications processor
for smartphones and tablets, according to Jim McGregor, an
analyst at Tirias Research.

“It’s the result of changing market dynamics with a rather
bleak outlook for the traditional PC market,” McGregor said.
“Tegra has not secured the high-volume design wins.”

Nvidia is also targeting Tegra at information and
entertainment systems in cars, converting graphics processors
for use in server computers and selling handheld gaming devices
built on the mobile processor. Licensing revenue would make it
possible for Nvidia to keep funding those efforts, according to
McGregor.

Ken Brown, a spokesman for Nvidia, said each generation of
the Tegra processor has done better than its predecessor. The
company “firmly believes that Tegra is gaining momentum,” he
said in an interview.